Re PH Glatfelter Co and Anor v Rothprint Pty Limited and Ors [1991] FCA 8; 27 FCR 382 (4 February 1991)

FEDERAL COURT OF AUSTRALIA

Re: P.H. GLATFELTER CO and ANOR
And: ROTHPRINT PTY LIMITED and ORS
No. G506 of 1990
FED No. 11
Practice and Procedure - Application for discontinuance with leave
[1991] FCA 8; 27 FCR 382

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Foster J.(1)

CATCHWORDS

Practice and Procedure - application for adjournment - witnesses essential to applicant's case unable to attend hearing - witnesses' employer prohibits travel to Australia due to war overseas.

Application for discontinuance with leave - whether an order for dismissal is appropriate instead - discontinuance - appropriate terms to protect the respondent - costs - limits to the applicant's right to bring fresh proceedings on the same or substantially the same causes of action in the future.

Federal Court Rules - Order 22 rules 2(d), 3, 5, 8

HEARING

SYDNEY
4:2:1991

Counsel for the Applicant: Mr J. Garnsey QC with Ms A. Bowne

Instructed by: Allen Allen and Hemsley

Counsel for the respondent: Mr J. McCarthy QC with Mr J. Kildea

Instructed by: Anthony Hawkins and Co.

ORDER

The application for an adjournment be rejected.

The matter be relisted at 9.30am on 7 February 1991.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

These proceedings have been set down for hearing for some time. The hearing was to commence today and proceed for some 10 consecutive days. The litigation involved in the proceedings is clearly of a complex, commercial kind. It has equally clearly involved considerable expenditure of time and energy in its preparation.

2. During the January vacation, application was made by the applicants for an adjournment of these proceedings. The application was heard by Hill J. The basis of the application was the unavailability of certain essential witnesses who were executives of the first applicant, which is an American company. Because of the existence of the hostilities which are currently referred to as the Gulf War and the associated threat of terrorist activity, the chief executive of the first applicant had issued a general direction that no executives of that company were to travel to international destinations whilst the war and the accompanying threat continued.

3. It is apparent from evidence placed before the court that that direction was given without special consideration as to the existence of this litigation. The result of it was, however, so far as the executives who were to be essential witnesses in this case was concerned, that they were expressly forbidden to travel to Australia. It is clear that the direction was based upon considerations of the safety of the personnel of the first applicant and also upon the considerations of the proper and efficient running of that company having regard to the possibility that its senior executives might be stranded in foreign countries and unable to return to their duties in America through apprehension of terrorist activity.

4. There is no suggestion in the case that this policy was other than a bona fide policy arrived at by the first applicant for the reasons to which I have just referred.

5. After careful consideration of this matter, Hill J. refused the application. Consequently the situation obtained that the matter remained listed for hearing to commence before myself, as the judge allocated for the hearing of the matter, that hearing to commence today.

6. Today there has been a renewal of the application for an adjournment based on some additional evidence that has been placed before me. In the event of failure of that application, the applicants seeks a discontinuance with the leave of the Court pursuant to Order 22 rule 2(d) of the Federal Court Rules.

7. The additional evidence to which I have made reference is not, in my opinion, such as to lead me to vary the order already made by Hill J. It is apparent today as it was in the hearing before his Honour, that it is not a case of its being impossible for the relevant executive witnesses to come to Australia to give evidence but that, simply as a matter of company policy, it has been decided by the first applicant that their making of the journey is undesirable. The situation remains the same today. The duration of the Gulf War is indefinite as is the possible period of ensuing and related terrorist activity. Any period of adjournment which might have been granted pursuant to this application would, therefore, be indefinite and could obviously lead to problems in the future with further wastage of the effort and expense of the parties and, of course, of the time of the court.

8. It is probably worthy of note that none of the evidence has disclosed any specific threats to the safety or well being of the first applicant company or of its executives. Travel across the Pacific Basin does not involve the traversing of any portions of the theatre of war. There has not been any specific terrorist activity in Australia or any specific threat of it. This is not to say that it was in any way inappropriate for the first applicant to formulate and put into effect the policy of which evidence has been given. That must, of course, remain a matter for its own private and serious considerations based upon its evaluation of the circumstances as revealed to it by information available to it. Those considerations, however, cannot be determinative of the question whether a case set down for hearing in this court can simply be adjourned. The more so in circumstances where the other parties are ready and desirous of proceeding.

9. In all the circumstances I consider that I should not grant this renewed application for an adjournment.

10. I turn then to the further application that is made in the alternative. I should indicate that this application is also opposed by the respondents. Indeed the respondents seek the dismissal of the application for discontinuance with leave and the substitution therefore of an order of dismissal of the proceedings.

11. I am satisfied that it would be inappropriate for the court, certainly at this stage, to make any order which would simply dismiss the applicant's applications. There is no suggestion that the substantive proceedings which have been brought were not bona fide prosecuted. Indeed some aspects of the proceedings have been disposed of in the applicants favour. It is not put on the material available that they were merely frivolous or vexatious in their conception or institution.

12. I must approach this matter on the basis that the court has before it a bona fide commercial dispute the merits of which can only be determined in the litigation itself. Indeed the evidence establishes that arrangements of a final nature have been made for the travel to Australia of the witnesses in question and that those arrangements became cancelled only upon the outbreak of hostilities in the Gulf War. It is worthy of notice that had the travel arrangements been adhered to the witnesses quite obviously would have been present in Australia today and this case would have proceeded.

13. The bases upon which leave to discontinue proceedings should be granted have been the subject of consideration in a number of decided cases. The principles which may be derived from the consideration of those cases appear to be quite adequately, if I may say so with respect, set out in a footnote to Order 22 in Camilleri Practice and Procedure of the High Court and Federal Court of Australia, volume 2 at page 1255.

14. That note reads as follows:

Normally the court will allow the applicant to discontinue
if he wishes to, on the grounds that it is undesirable that
an applicant should be compelled to continue litigation
against his will. This is always provided that no injustice
will be caused to the respondent if the litigation is so
discontinued. The court should thus grant leave to
discontinue if it can, but in doing so should be careful to
see that the respondent is not deprived of some advantage
which he has already gained in the litigation. The Court
should be ready to grant the respondent adequate protection
to ensure that any such advantage is protected.

15. Applying these principles I have come to the conclusion that leave to discontinue should be granted but that I should give consideration as to whether some terms should be imposed on the granting of that leave in all the circumstances of the case.

16. In the first place provision is made in Order 22 rule 3 for an order for costs against the party who seeks a discontinuance. I am satisfied that an appropriate order for costs should be made in these proceedings and that that order should encompass costs which have been reserved in the various interlocutory hearings which have occurred up to this point of time.

17. There has been considerable debate before me as to the form of any such order and as to whether it should be linked with the granting of leave. Reference has been made in submissions to the terms of Order 22 rule 8 which deals with the staying of subsequent proceedings by way of securing costs ordered to be paid in discontinued proceedings. It is not necessary for me to set out the substance of the rule in these reasons.

18. I have come to the conclusion that I should make an order in broad terms only in light of the fact that the taxation of costs would have to take place before the appropriate officer of the court who at that stage would have placed before him all factual matters relevant to the making of appropriate awards of costs.

19. The order I propose to make is that the applicants should pay the costs of the respondents necessarily thrown away as the result of the discontinuance of the proceedings. Such costs should include costs which have previously been reserved and should include fees for two counsel when two counsel have appeared.

20. I express the view that due regard will no doubt be paid to the fact that the case was set down for a continuous hearing of ten days commencing today and that counsel would no doubt have made themselves available in the ordinary listing of their work for the full period.

21. The appropriate award of costs must remain within the province of the taxing officer, subject of course to any review provided for by the Rules of Court.

22. I have also given consideration as to whether I should make the payment of these costs such as they may be assessed or arrived at by taxation, a condition precedent to the right of the applicants to bring fresh proceedings based upon the same or substantially the same causes of action. In the upshot I have come to the conclusion that there would be considerable difficulty in the framing of such an order and that in any event the position of the respondents is adequately safeguarded by the terms of Order 22 rule 8.

23. I therefore do not add to the order for costs that I have already made.

24. Considerable debate took place before me as to whether some additional terms should be imposed as to the bringing of fresh proceedings on the same or substantially similar causes of action to those which are sought to be discontinued.

25. Although the material is in the circumstances necessarily not complete, I am satisfied that the existence of the present litigation and publicity within the industry attendant upon it has had at least a potentially inhibiting effect upon the commercial activity of the respondents. It may well be, of course, that when the merits of this case are gone into, if in fact they are in the future, it may be held that such inhibition was indeed appropriate, having regard to the rights of the parties. That matter is not however before me.

26. The fact is that the applicants commenced these proceedings and continued with them to the point where they would have been heard in the period allocated for their hearing today. In the nature of things, a decision on the merits would have been given within a reasonable space of time from today and the rights of the parties would then have been determined and the commercial situation clarified.

27. If no order is made or term imposed as to the reviving of the proceedings after their discontinuance by leave of the court on application of the applicants, then it would appear a period of some three to four years could elapse during which the proceedings could be brought afresh. After some hesitation I have come to the conclusion that that situation would not in the circumstances be reasonable, having regard to the legitimate expectations of the respondents that the matter would have been decided within a reasonable space of time from today.

28. I have come to the conclusion that as a condition of leave being granted to discontinue these proceedings, there should be some provision made for the bringing of any further proceedings within a time which on the face of it in all the circumstances would be reasonable. I have come to the conclusion that such a time should both be definite in the first instance but also have some potential for flexibility to accommodate possible changes and circumstances which simply cannot be envisaged at this point of time in the state of information available to the court.

29. I have come to the conclusion that the applicants should be put on terms to commence any further action on the same or substantially the same causes of action within a period of six calendar months from today or within such further period as the court on application may allow, such application to be made within that period of six calendar months from today.

30. I am satisfied that it is not possible as a matter of logic or of the construction of the relevant rules to simply impose this limitation period as a condition of the granting of leave. It is necessary for the proper operation of the rules relating to discontinuance that the action be discontinued as and from a particular point in time and not as and from a time in the future when a particular condition is complied with.

31. After discussion with counsel, for whose assistance I am grateful, I have come to the conclusion that to give effect to what I propose, it is necessary that an undertaking be given to the court on behalf of the applicants to the effect that they will commence any such proceedings, if at all, within the six months period to which I have made reference or such further period as may be allowed by the court in the circumstances to which I have also made reference.

32. It is also necessary that an undertaking be given that should proceedings of the type envisaged be commenced beyond that period then the applicants will consent to a permanent stay of those proceedings if such a stay be sought.

33. It has been made known to me, and obviously in the circumstances this would be reasonable, that an undertaking in those terms cannot be given today because of difficulties in obtaining necessary instructions from principals in America.

34. In the circumstances I propose to list this matter, at 9.30 am on Thursday morning so that the legal representatives of the applicants may seek, and hopefully obtain, the necessary instructions to give the undertakings to which I have made reference.

35. Upon receipt of those undertakings which should be reduced to writing, the necessary leave can be granted and the proceedings discontinued pursuant to that leave.

36. I note that provision is made in Order 22 rule 5 for an appropriate notice of discontinuance and the parties will no doubt have regard to that rule when producing the necessary documentation on Thursday.

37. Insofar as it may be that the cost order that I have made does not encompass the proceedings before me today, and on Thursday, I indicate for more abundant clarity that the applicants are to pay the costs of these proceedings which were in fact instituted by notice of motion dated 1 February 1991.